IT Stocks Outlook
Seen range-bound on uncertainty over US rate cuts
This story was originally published at 22:39 IST on 29 November 2024
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MUMBAI – Shares of information technology companies are expected to see a range-bound movement next week and will continue to take cues from developments in the US, according to analysts. This week, the Nifty IT index closed 0.4% lower. The fall was driven by concerns over the US inflation data, which revealed a stronger-than-expected consumer spending in October. The data has raised concerns that the pace of future rate cuts by the US Federal Reserve may be slower than expected, potentially affecting sectors like information technology, which have significant exposure to the US market.
This week, the Nifty IT index closed at 43146.25 points. Of the 10 constituents of the IT index, six gained week-on-week, while the rest declined. While Coforge and Mphasis were among the top gainers, HCL Technologies and Infosys were among the biggest losers. Compared to the IT index, both the benchmark Nifty 50 and the BSE Sensex gained 0.9%, respectively. Next week, support for the IT index is seen at 42390 and resistance at 43800.
The Nifty IT index took a breather this week after its strong recent outperformance. The sector remains a favourite, trading at all-time highs, and any dip should be seen as a buying opportunity, said an analyst at a domestic brokerage. The IT index has gained 6.7% since Oct. 28. It has shown relative resilience in November, even as other benchmark indices succumbed to selling pressure. Analysts anticipate this trend to persist, with the IT sector likely to outperform.
The IT sector has formed a bearish candle with a probable bearish divergence in the relative strength index which indicates a correction, but it is likely to be short-lived considering a strong uptrend, a technical analyst said.
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Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:
| Company | Price | Week-on-week change in % | Resistance | Support |
|---|---|---|---|---|
| COFORGE LTD | 8685.85 | 4.30 | 8811.80 | 8478.00 |
| HCL TECHNOLOGIES LTD | 1848.05 | (-)2.70 | 1889.80 | 1813.10 |
| INFOSYS LTD | 1857.85 | (-)2.30 | 1892.00 | 1828.00 |
| L&T TECHNOLOGY SERVICES LTD | 5285.20 | (-)0.40 | 5367.00 | 5201.10 |
| LTIMINDTREE LTD | 6172.40 | 0.60 | 6304.10 | 6064.10 |
| MPHASIS LTD | 2974.55 | 3.20 | 3022.50 | 2914.10 |
| PERSISTENT SYSTEMS LTD | 5905.65 | 1.90 | 6006.60 | 5760.40 |
| TATA CONSULTANCY SERVICES LTD | 4270.85 | 0.60 | 4358.10 | 4152.00 |
| TECH MAHINDRA LTD | 1712.30 | (-)2.00 | 1743.80 | 1684.80 |
| WIPRO LTD | 577.85 | 1.10 | 585.90 | 567.60 |
| NIFTY IT | 43146.25 | (-)0.40 | 43848.20 | 42387.80 |
| NIFTY 50 | 24131.10 | 0.90 | 24343.50 | 23820.90 |
| BSE SENSEX | 79802.79 | 0.90 | 80482.00 | 78686.60 |
End
Reported by Darshan Nakhwa
Edited by Akul Nishant Akhoury
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